Attorney General Lori Swanson of Minnesota last week sued (news release, complaint) and then negotiated a settlement with National Arbitration Forum, in which the NAF agreed to drop its business of arbitrating credit card and other consumer collection disputes.

In her release today announcing the settlement, Swanson said: "I am very pleased with the settlement. To consumers, the company said it was impartial, but behind the scenes, it worked alongside credit card companies to get them to put unfair arbitration clauses in the fine print of their contracts and to appoint the Forum as the arbitrator. Now the company is out of this business."

The Forum also issued a release, defending its practices and characterizing the settlement as a business decision forced upon it.

"The National Arbitration Forum remains committed to consumer arbitration as the best and most affordable option for consumers to resolve disputes quickly and efficiently. However, the FORUM lacks the necessary resources to defend against increasing challenges to arbitration on all fronts, including from state Attorneys General and the class action trial bar," said Forthright CEO Mike Kelly. "Mounting legal costs, a challenging economic climate, and increased legislative uncertainty surrounding the future of arbitration have prompted the FORUM to exit the consumer arbitration arena. At this time, the costs of providing consumer arbitration services far exceed the revenue generated. Until Congress resolves the legal and legislative uncertainty the cost is simply too high for users and providers of consumer arbitration."

Attorney General Swanson gets to take a D.C. victory lap on Wednesday when she testifies before the House Committee on Oversight and Investigations, Domestic Policy Subcommittee, at a hearing, "Arbitration or 'Arbitrary': The Misuse of Arbitration to Collect Consumer Debts." Kelly is also scheduled to testify, but the hearing was planned before Swanson's suit and the settlement, so he could be forgiven...